Sears anticipates returning to a profit in 1Q

The company also said a key revenue metric declined, as sales of consumer electronics were weak at both its Sears and Kmart stores.

Investors were enthused about the first-quarter guidance, sending Sears' stock up $9.47, or 17.6 percent, to $63.25 in afternoon trading. The shares have jumped 66 percent for the year to date and have traded in a 52-week range of $28.89 to $86.72.

The Hoffman Estates, Ill. company expects first-quarter earnings from continuing operations of $155 million to $195 million, or between $1.46 and $1.84 per share. That compares with a loss of $1.53 per share a year ago. Analysts polled by FactSet had predicted a loss of $1.69 per share.

The current period's results include an approximately $235 million gain from the sale of certain U.S. and Canadian stores. The store sales resulted in $440 million in cash proceeds.

Excluding the sale, Sears' projected loss would come to between $40 million and $80 million, narrower than the $165 million in the same quarter last year.

CEO and President Lou D'Ambrosio reiterated in a note to employees that "if we execute with a focus on our customers and take actions to improve operations we can change the direction of our company. We are doing that and we're starting to see the results."

"However, this is just the beginning, as we have a way to go to restore the strength of Sears Holdings," he added.